Senate To Seal Fate Of Brazil Gambling Bill

February 28, 2022
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Brazil’s landmark legislation authorizing hundreds of thousands of bingo machines and all forms of online gaming faces an uncertain path through the Senate after its approval in the lower house, according to experts.

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Brazil’s landmark legislation authorizing hundreds of thousands of bingo machines and all forms of online gaming faces an uncertain path through the Senate after its approval in the lower house, according to experts.

Bill 442/1991 was passed last week by Brazil’s Chamber of Deputies but now must undergo scrutiny by the 81-member Senate, against the uncertain backdrop of election-year politics.

In the wake of the Chamber’s vote, one advocate for gambling expansion in Brazil said it was “an historic day … but it’s important to acknowledge that the journey has not come to an end; we have advanced one stage in the process.”

“We still have a long road until the approval of the bill by the National Congress,” wrote Magno José Santos de Sousa, a prominent blogger on gambling issues and president of the Legal Gaming Institute (IJL), which advocates for a broad expansion of multiple forms of gambling in Brazil.

The Chamber of Deputies’ 246-202 vote to pass Bill 442/1991 puts the lower house in the drivers seat to determine the fate of gambling expansion because deputies will get to decide whether to accept or reject any changes made to the legislation if and when it is approved by the Senate, before sending it on to desk of Brazil’s President.

Senate president Rodrigo Pacheco has yet to show his hand on expanded gambling, however, and observers will also watch closely in the coming days to see which senator is appointed as the rapporteur of the bill who will be responsible for consolidating Senate amendments and drafting a new version of the measure for senators to vote upon.

“It is still unclear how long it will take to be approved at the Senate,” said Luiz Felipe Maia, a partner at FYMSA Advogados law firm in São Paulo and a Brazilian gaming expert.

“We have to wait to see who will be appointed as the rapporteur of the bill and how the president of the Senate will deal with the subject. If both are in favor, it could be voted still in the first semester, before the election.”

Last week, Pacheco did suggest that the bill will undergo a full review by one or more Senate committees, rather than being brought straight to the Senate floor even though that is an option available to the Senate leader.

“The consideration time is going to depend on how many specialist committees the Senate president Rodrigo Pacheco appoints to analyze the proposal,” IJL’s Magno told VIXIO GamblingCompliance.

“If he decides to send the proposal to the committees on economic affairs and on the constitution, judiciary and citizenship, as well as consideration by the plenary of the chamber, then the process may take longer.”

Sweeping Expansion

Although broad gambling bills have been enacted in recent years in such jurisdictions as Ukraine, Illinois and Pennsylvania, it is hard to think of any legislation quite as extensive as the version of Bill 442/1991 that was passed by Brazil’s Chamber of Deputies last Wednesday (February 23).

The bill as approved by deputies would authorize more than 50 casinos, which have been prohibited in Brazil since a 1946 president decree.

One casino-resort would be permitted in each of Brazil’s 26 states and the federal capital district of Brasilia.

A second casino license would be available in populous states Minas Gerais and Rio de Janeiro and in the vast territories of Amazonas and Pará, while three resorts would be authorized in the state of São Paulo.

In addition, further casinos could be opened in designated tourist areas, provided they are not within 100km of another casino-resort. Between one and three riverboat casinos would also be authorized on major Brazilian riverways, with up to ten casino licenses for seafaring cruise ships as well.

Still, even more eye-catching than the casino provisions are those to re-establish a legal bingo market in Brazil.

In theory, almost 6,000 bingo halls could be permitted in Brazilian municipalities, with as many as 45 halls in the city of Rio de Janeiro and more than 80 in São Paulo.

With each location able to offer up to 400 video-bingo machines, that would amount to nearly 2.4m electronic bingo devices in the admittedly highly unlikely event that each municipality ultimately hosts its maximum allotment of bingo halls.

Several major gaming suppliers have already made strategic investments in the video-bingo segment in recent years, in part due to the potential of the Brazilian market, and it would not be a surprise if such a focus increased in light of the Chamber of Deputies vote last week.

Bill 442/1991 does not specifically define what constitutes video-bingo, but it is clear that machines in bingo locations must be limited to electronic bingo games with full slot machines permitted strictly within casinos.

In current economic conditions, a realistic expectation would be for the regulated Brazilian market to accommodate around 600 bingo halls and 25 casino-resorts, said Magno José, the IJL president.

“In our view, what was missing was the legalization of slot machines” in non-casino locations, Magno told VIXIO GamblingCompliance. “Brazil today has more than 400,000 machines in operation in the street and the fact that Bill 442/91 would criminalize this means the operation of these devices could migrate to truly criminal elements.”

The bill is much less definitive with regard to online gaming, although it would appear to be designed to dovetail with the provisions of an existing 2018 lottery law to regulate online fixed-odds sports betting that is in the process of being implemented by Brazil’s Ministry of Economy.

A regulatory decree setting the basic framework for a licensing regime for online sports betting is understood to be imminent, with officials hopeful of then being able to follow through with more detailed decrees in the next few months to establish a regulated market just in time for November’s FIFA World Cup.

The Chamber of Deputies bill merely grants the economy ministry authority to establish “a specific regulation” for online gaming, which would be subject to the bill’s general provisions applied to other forms of gambling, including a 17 percent tax rate on gross gaming revenue.

Problematic Provisions

It was a positive move that deputies ultimately dropped proposals from an earlier version of their bill to repeal Brazil’s 2018 law and instead establish a licensing regime that would have limited the number of sports-betting and online-gaming licensees on a state-by-state basis, said Maia, the Brazilian gaming law expert.

Still, there remain several problematic provisions that the Senate will hopefully address, Maia told VIXIO GamblingCompliance.

Among them are an express prohibition on the offering of any kind of bonus for online or land-based gambling.

Quarterly regulatory fees of around US$60,000 per online casino or US$120,000 for a land-based resort are also too high, according to Maia, with various legal questions surrounding the taxes that would be applied to both operators and player winnings.

Maia also cited the unique provision of the Chamber bill that would require casino or bingo-hall operators to share 40 percent of revenue generated by video-bingo or slot machines with the machine provider.

“The law should not impose the commercial terms,” he said.

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